Chinese companies, that are building roads and railroads in Serbia, are exempt from paying VAT and customs duties. This is stipulated in the Economic and Technical Cooperation Agreement concluded between the governments of Serbia and China, which Addendum 3 was approved by the Serbian government at its last session.
The Ministry of Construction says that the total value of all the infrastructure project agreements, concluded between Serbia and China, stands at 2.5 billion dollars. If we add to this the value of the projects that are currently being negotiated, than their value totals around 6 billion dollars.
The Ministry of Construction claims that Serbia will not lose a penny because Chinese companies are exempt from paying VAT and customs duties.
“The infrastructure projects that Serbia and China are implementing together are funding from the loans granted by the Chinese Exim Bank, under the best possible conditions. The State of Serbia is the beneficiary of these loans. Just like with any projects that are funded by loans granted by international financial institutions, and based on bilateral agreements, VAT and customs duties are not applied”, the Ministry of Construction adds.
Chinese companies are currently working on two segments of the Corridor 11, on the reconstruction of the Belgrade-Budapest railroad, and on the revitalization of the Kostolac A thermal power plant. The Serbian authorities are also negotiating with Chinese companies about the construction of a Belgrade bypass, and continuation of the works on the motorway leading to Montenegro.
Experts think that roads, railroads and other infrastructure will cost more to build than stated in the contracted prices because the state allowed the contractors to be exempt from paying taxes.
“The practice so far was that foreign companies are exempt from paying VAT if they are implementing development and humanitarian projects in Serbia, but here, we are talking about a loan that Serbia took and that is paying interest rate on”, says Dragoljub Rajic, from the Business Support Network, and adds: “It is the Chinese construction companies that stand to generate the biggest profit from this, as contractors. These are purely commercial projects for the Chinese, and because they are commercial, it would be in order if they paid VAT just like any other company from Europe or the rest of the world that operates here”.
(Vecernje Novosti, 18.10.2017)
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